Allowed

Central Bank of India v. M/s Mrr Cashews

DRT22 May 2023TA/212/2022

Case brief

AI extract

What is this about?

The recovery tribunal allowed an application filed by Central Bank of India for issuance of recovery certificate. The bank proved the loan disbursement and default via unchallenged affidavit and documents. The court permitted realization of accrued plus claimed interest and sale of security properties.

What did the court decide?

Issuance of recovery certificate permitting realization of Rs.1,03,24,329/- plus 14% annual interest and sale of schedule properties.

Central Bank of India versus M/s Mrr Cashews — Execution and Attachment | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 22^nd day of May, 2023

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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TA No.212 of 2022

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(Originally filed before DRT-I Chennai as OA No.404/2020 and thereafter transferred to to this Tribunal and renumbered as TA No.212 of 2022)

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Central Bank of India Panruti Branch No.65, Cuddalore Main Road Panruti – 607 106 Represented by its Authorised Officer …Applicant

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Versus

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M/s MRR Cashews A Proprietary concern Represented by it Proprietor Mr. G. Sakthivel, S/o Mr. Govindasamy Having office at 108, North Street, North Sathipattu Panruti – 607 102

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Mr. G. Sakthivel S/o Mr. Govindasamy Residing at No.28, North Melambattu Panruti Taluk, Cuddalore District Panruti – 607 103 …Defendants

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Counsel for the Applicant Bank : M/s E. Vijayaraghavan Counsel for Defendants : Ex-parte

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants seeking issuance of a Recovery Certificate for an aggregate sum of Rs.1,03,24,329/- together with interest at the rate of 16% per annum with monthly rests from the date of the

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application till the date of realisation along with costs of the application and for sale of schedule mentioned properties.

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The subject matter of the case is the “Cash Credit Faciliy” availed by the defendants from the applicant bank.

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It is the case of the applicant that the defendants approached the applicant bank for grant of credit facility for the purpose of their business on 06.05.2013 and considering the said request the applicant sanctioned Cash Credit Facility of Rs.50,00,000/- vide sanction dated 13.05.2013. It is also the case of the applicant that the defendants executed necessary loan documents on 13.05.2013 viz., Demand Promissory Note for Rs.50 lakhs, Letter of confirmation of execution of Demand Promissory Note, Letter agreeing to pay interest and Agreement of hypothecation to secure Demand Cash Credit Against goods, more fully described in Schedule „A‟ to the OA.

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It is also the case of the applicant that the 2^nd defendant deposited the title deeds of the property more fully described in Schedule „B‟ to the OA on 9.5.2013 with an intention to create equitable mortgage over the same and confirmed the same by executing Memorandum of Deposit of Title deeds dated 16.5.2013 registered as Doc. No.1413/2013 on the file of SRO, Panruti.

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It is the further case of the applicant that the defendants acknowledged their debt by executing new set of documents in favour of the applicant bank on 18.5.2016 viz., on demand promissory note for Rs.50 lakhs, Letter of confirmation of

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execution of demand promissory note, Letter agreeing to pay interest and Agreement of hypothecation to secure demand cash credit against goods.

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It is the case of the applicant that the defendants having availed the credit facility defaulted in repayments and failed to regularize the loan account despite repeated demands and also failed to comply with the terms and conditions of sanction and therefore the loan account was classified as NPA on 05.07.2016.

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It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount. The efforts of the applicant bank to make the defendants to settle the loan did not yield any result, and hence the applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

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Summon was taken out to the defendants and the summons returned with endorsement “Not claimed” and as such the service was held sufficient. As there was no representation on behalf of the defendants on 02.06.2022, the defendants were called absent and set ex-parte. Applicant Bank filed Proof Affidavit along with 13 documents, which were marked as Exhibits A-1 to A-13 on 20.02.2023. The Ld. Counsel for Applicant Bank made his submissions on 14.03.2023 and thereafter the matter stood till this date for passing final orders.

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The following issues arise for consideration in the matter: -

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(a) Whether the applicant had succeeded in proving the liability of the defendants?

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(b) What order as to cost of the proceedings need be passed?

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These issues are considered together.

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Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

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The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-13 along with the proof affidavit. Exhibits A-1 is the Loan Application Form dated 06.05.2013 submitted by the defendants. Exhibit A-2 is the Sanction Letter dated 13.5.2013 issued by the applicant bank. Exhibit A-3 is the Demand Promissory Note for Rs.50 lakhs executed by the defendants. Exhibit A-4 is the Letter of confirmation of execution of Demand Promissory Note dated 13.05.2013 executed by the defendants. Exhibit A-5 is the Letter agreeing to pay interest dated 13.5.2013 executed by the defendants. Exhibit A-6 is the Agreement of hypothecation to secure Demand Cash Credit Against Goods dated 13.5.2013 executed by the defendants. Exhibit A-7 is the Demand Promissory Note for Rs.50 lakhs dated 18.5.2016 executed by the defendants. Exhibit A-8 is the Letter of confirmation of execution of Demand Promissory Note dated 18.5.2016 executed by the defendants. Exhibit A-9 is the Letter agreeing to pay interest dated 18.5.2016 executed by the defendants. Exhibit A-10 is the Agreement of hypothecation to secure demand cash credit against goods dated 18.5.2016 executed by the defendants. Exhibit A-11 is the registered Memorandum of Deposit of Title deeds registered as Doc. No.1413/2013 on the file of SRO, Panruti. Exhibit A-12 is the registered sale deed in favour of Mr. G.

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Sakthivel by Mr. R. Karunakaran registered as Doc. No.1274/2013 by SRO, Panruti. Exhibit A-13 is the statement of accounts in respect of the loan account along with certificates under Bankers‟ Book Evidence Act.

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Exhibit A-1 and A-2 evidences that the defendants by loan application dated 6.5.2013 approached the applicant bank for grant of credit facility for the purpose of its business and considering the said request the applicant sanctioned Cash Credit facility limit of Rs.50 lakhs to the defendants by its sanction dated 13.05.2013. Exhibit A-4 to A-6 evidences that the defendants executed necessary loan documents on 13.05.2013 to secure the said facility. Exhibits A-7 to A-10 evidences that the defendant acknowledged the debt by executing renewed documents on 18.05.2016 in favour of the applicant bank. Exhibit A-11 and A-12 evidences that the Schedule „B‟ mentioned property belonged to the 2^nd defendant and the 2^nd defendant created equitable mortgage over the same by executing Memorandum of Deposit of Title deeds dated 16.5.2013 registered as Doc. No.1412/2013, SRO, Panruti. Exhibit A-13, the statement of accounts in respect of the loan account produced and certified under the Banker‟s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants. It is clear from the statement of accounts that penal interest is not capitalized.

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The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with Exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the

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Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Point is answered accordingly.

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In view of the fact that the loan availed by the defendant is a business loan and further that the applicant has calculated and claimed interest at the contractual rates till the date of filing of the OA, this Tribunal is of the view that the pendent lite and future interest can be awarded at reduced rates.

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In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

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In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan and the default to the tune of OA claim, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

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(a) TA No.212 of 2022 stands allowed.

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(b) Applicant is permitted to realize a sum of Rs.1,03,24,329/- with further interest at the rate of 14% per annum (simple) from the defendants jointly and severally from the date of filing of the OA till date of realization, after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule mentioned properties and other assets of the defendants.

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the 2^nd defendant is personally liable for all such amounts due.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 22^nd day of May, 2023)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

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Central Bank of India v. M/s Mrr Cashews

Case brief

What is this about?

What did the court decide?

Central Bank of India v. M/s Mrr Cashews

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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Case details

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